Work individually or as a team of two students. Cost/Benefit Analysis James is working to develop a preliminary cost-benefit analysis for a new client-server system. He has identified a number of cost factors and values for the new system, summarized in the following tables: Development Costs - Personnel 1. 2 Systems Analysts 2. 4 Programmer Analysts 3. 1 GUI Designer 4. 1 Telecommunication Specialist 5. 1 System Architect 6. 1 Database Specialist 7. 1 System Librarian Development Costs - Training 8. 4 Oracle training registrations Development Costs - New Hardware/Software 9. 1 Development server 10. 1 Server software (OS, misc.) 11. 1 DBMS server software 400 hours/ea @ $50/hour 250 hours/ea @ $35/hour 200 hours/ea @ $40/hour 50 hours/ea @ $50/hour 100 hours/ea @ $50/hour 15 hours/ea @ $45/hour 250 hours/ea @ 15/hour $3,500/registration $18,700 $1,500 $7,500 $950/client 12. 7 DMBS client software Annual Operating Costs - Personnel (5% increase each year - starting the 1st year) 13. 2 Programmer Analysts 14. 1 System Librarian 125 hours/ea @ $35/hour 20 hours/ea @ $15/hour Annual Operating Costs - Hardware, Software, and Misc. (starting the 1st year) 15. 1 Maintenance agreement for server 16. 1 Maintenance agreement for DBMS $995 $525 The benefits of the new system are expected to come from two sources: increased sales and lower inventory levels. Sales are expected to increase by $30,000 in the first year of the system's operation and will grow at a rate of 10% each year thereafter. Savings from lower inventory levels are expected to be $15,000 per year for each year of the project's life. Develop an Excel spreadsheet that summarizes this project's cash flow for the cost-benefit analysis, assuming a four-year useful life after the project is developed. See the example of the cost-benefit analysis below. Compute the present value of the cash flows, using an interest rate of 9%, and then type your answers to the following questions in a Word document. 1. What is the NPV for this project? 2. What is the ROI for this project? 3. What is the break-even point? 4. Should this project be accepted by the approval committee? Deliverables Type all the team member names in the Word document with the answers and save it as "Assignment1_Lastnames.docx". Also, save your Excel spreadsheet as "Assignment1_Lastnames.xlsx." Upload both Word document and Excel files to Blackboard folder "Assignment 1: Cost-Benefit Analysis (15 pt)." Submit only one copy per team. Cost-Benefit Analysis Example 2022 2023 2024 2025 2026 Total Reduced inventory costs Benefits Increased sales Reduction in customer complaint calls Total Benefitsb 500,000 530,000 561,800 595,508 2,187,308 70,000 70,000 70,000 70,000 280,000 68,000 68,000 68,000 68,000 272,000 638,000 668,000 699,800 733,508 2,739,308 Development Costs 2 servers @ $125,000 250,000 0 0 0 0 250,000 Printer 100,000 0 0 0 0 100,000 Software licenses 34,825 0 0 0 0 34,825 Server software 10,945 0 0 0 0 10,945 Development labor 1,236,525 0 0 0 0 1,236,525 Total Development Costs 1,632,295 0 0 0 0 1,632,295 Operational Costs Hardware 50,000 50,000 50,000 50,000 200,000 Software 20,000 20,000 20,000 20,000 80,000 Operational labor 115,000 119,600 124,384 129,359 488,343 1,632,295 (1,632,295) (1,632,295) Total Operational Costs Total Costs Total Benefits - Total Costs Cumulative Net Cash Flow Return on Investment (ROI) Break-Even Point 14.1% (338,670/2,400,638) 3.37 years (3 years of negative cumulative cash flow + [534,149 - 338,670]/534,149 = 0.37) 185,000 189,600 194,384 199,359 768,343 185,000 189,600 194,384 199,359 2,400,638 453,000 478,400 505,416 534,149 338,670 (1,179,295) (700,895) (195,479) 338,670